The IRS is a revenue-generating authority, and it does well to collect every penny the taxpayers owe to the treasury. However, the IRS understands that the taxpayers are the basic component of this system and the system needs them to survive and progress. That is why the IRS allows taxpayers many convenient options to pay back their tax balance. See what are your options if you default on IRS payment plan in Omaha, NE.
One such option is a payment plan, which allows taxpayers to enter into a payment plan with the IRS and pay back what they owe in a convenient manner by paying a small additional amount called penalty or interest on unpaid taxes.
Taxpayers who enter into a payment plan are mostly facing financial hardships and are not in a position to pay off the tax they owe by just signing a cheque. The IRS offers them a number of easy options to satisfy their outstanding tax.
If a taxpayer cannot pay tax at all, he may choose IRS’s offer in compromise option to settle tax for a lesser amount.
Another option for taxpayers with steady but low income is to get installment agreement. When choosing installment agreement or payment plan, the taxpayer agrees to pay the tax balance in easy installments along with the current taxes.
This plan always works for the majority of consumers. The plan allows taxpayers to pay what they owe now, over an extended period. But that is not true for everyone. If someone has tax debt to its name, it is clear that they are not in a perfect position financially. If they defaulted on tax payment, they could also default the payment plan.
Defaulted On IRS Payment Plan In Omaha, NE – See What Are Your Options
If you default an IRS payment plan, the first thing to do is not to panic. If you wanted to make the payment and somehow, couldn’t do that due to any reason, the chances are that you will survive this. Yes, you may have to pay some additional penalties and interest for the period you don’t make a payment, but any serious action by the IRS can be avoided even now.
You need to understand the whole process after you default a payment plan so that you can understand it better and not get yourself in trouble.
Default Notice CP523 Or Letter 2975
First of all, it is not possible that you default the payment by mistake or due to negligence. The IRS sends you a default notice (CP523 or Letter 2975) after which you have 30 days to reinstate the payment plan by just making the payment.
If you make the payment after getting notice, it means that you have not defaulted.
If you don’t reinstate the plan within 30 days, the installment agreement plan will be terminated, after which you will have 30 days to appeal the termination.
Taxpayers need to provide a solid reason as to why they couldn’t make the payment. Otherwise, the appeal will be unsuccessful, and the IRS will move towards more aggressive ways to collect Tax.
If you had a valid reason for default, like you were unemployed, then you will renegotiate the plan for a lesser amount. If the agreement is defaulted due to new tax liability and that will be paid in two monthly payments, the payment plan stays intact. Qualification for the streamlined installment agreement will also result in reinstatement of payment plan. Contact USA Tax settlement for professional help!
Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.